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NFPO Combinations – AcSB

Date recorded:

At its meeting on September 9, 2020, the AcSB continued deliberating stakeholders’ responses on the Exposure Draft, “Combinations – Initial Measurements and Related Disclosures.” The Board also considered the Not-for-Profit Advisory Committee’s feedback and tentatively decided to:

  1. direct not-for-profit organizations (NFPOs) to Section 1582, Business Combinations, and Section 4410, Contributions – Revenue Recognition, when a for-profit enterprise is contributed to an NFPO;
  2. require all combinations of NFPOs under common control to be accounted for as mergers;
  3. add an illustrative example and clarify the other illustrative examples to better distinguish a merger from an acquisition; and
  4. clarify that a reduction in client communities of some but not all of the NFPOs that are combining is indicative of an acquisition

In situations where a combination is to be accounted for as an acquisition, the Board tentatively decided to:

  1. allow judgment for determining the fair value of deferred balances on acquisition while the AcSB continues its Contributions project; and
  2. clarify that the cost of collections acquired is the fair value of the collections at the acquisition date.

The AcSB also reiterated the importance of this project in the current environment and will continue its deliberations on this topic in October 2020.

Review the Executive Summary on the AcSB's Web site.

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